For full-year 2015, net revenue increased 89.5% to $40,235,362 million as compared to $21,236,704 in the prior year. The $18,998,658 increase in net revenues is primarily due to growth in the Company's three segments:

North America Transaction Solution segment: Continued organic growth of SMB merchants in this segment with emphasis on value-added offerings. Revenues for this segment were $27.4 million, a 41% increase over the prior year.

Mobile Solutions segment: As a result of a new business model, which was introduced in the third quarter of 2015, the Company began generating revenues from branded content. Revenues for this segment were $9 million, a 385% increase over the prior year.

Online Solutions: The Company completed its acquisition of PayOnline and began consolidating our Online Solutions segment in May. As a result of this acquisition we recorded $3.8 million of revenue during 2015, which represent a partial year of results.

Expanded into Kyrgyzstan and signed leading e-commerce company in the region

Expanded to Kazakhstan by creating partnerships with leading mobile operators

Launched payment processing in Kazakhstan through partnership with KAZKOM bank

Launched joint venture to focus on Gulf Cooperation Council (GCC) states and India

2015 Product Launches:

Launched Restoactive, a comprehensive mobile restaurant solution. Integrated with some of the biggest POS and restaurant management platforms such as MICROS, POSitouch, Aloha and Symphony. By integrating into the leading POS and restaurant management platforms Restoactive is now available to over 500,000 restaurants in the United States.

PayOnline launched "Pay-Travel" to automate payments for travel industry including integration with Global Distribution Systems (GDS), which includes Amadeus and Sabre and available for online and mobile application payments acceptance

Expanded our service offerings to over 100 payment methods internationally

"We are very pleased with our strong finish to the year with positive momentum across all channels. Our results are a reflection of our ability to deliver growth," commented Oleg Firer, CEO of Net Element. "Our growth for 2015, included completing our strategic acquisition of PayOnline, expanding organic growth throughout the year, and leveraging our strengths in omni-channel transaction processing to win new business."

Conference Call:The Company will host a conference call to discuss 2015 financial results and business highlights on March 31, 2016 at 4:30 PM Eastern time. Those interested in participating in the call are invited to dial +1 (877) 303-9858, or for international callers +1 (408) 337-0139 approximately 10 minutes prior to the start of the call. The conference call will also be webcast live at http://edge.media-server.com/m/p/kw2rnhus.

Following completion of the call, a recorded replay of the webcast will be available on the investors section of the Company's website at www.netelement.com.

Full-year 2015 Financial ReviewWe reported an adjusted net loss of $9,833,106, or $0.15 loss per share for the twelve months ended December 31, 2015 as compared to an adjusted net loss of $6,928,371, or $0.19 loss per share, for the twelve months ended December 31, 2014. This resulted in a net loss increase of $2,904,735 which is discussed further below.

Net revenues were $40,235,362 for the twelve months ended December 31, 2015 as compared to $21,236,704 for the twelve months ended December 31, 2014. The $18,998,658 increase in net revenues is primarily due to three factors:

1. Organic growth of SMB merchants in our North America Transaction Solutions segment (+$8 million).
2. We acquired and began consolidating revenues from our Online Solutions segment from PayOnline, acquired in May of 2015 for an additional $3.8 million in revenues during 2015.
3. We began generating revenues for branded content in our Mobile Solutions segment beginning the quarter ending September 30, 2015 and recognizing gross revenues for the sale of our own branded content (+$7.2 million).

Gross Margin for the twelve months ended December 31, 2015 was $6,258,147, or 16% of net revenue, as compared to $5,310,780, or 25% of net revenue, for the twelve months ended December 31, 2014. The primary reason for the decrease in the margin percentage was a change in revenue composition mix and associated costs as well as full restructure of the Mobile Solutions business in July 2014 as compared to the new business model of Mobile Solutions business for 2015. Our 2015 business mix had more branded content revenues which yield lower margins, and lower margins on revenues from North America Transaction Solutions despite higher sales volume for 2015 versus 2014. Higher margin legacy merchant portfolios have run off and are replaced with new portfolios with lower margins in North America.

Adjusted general and administrative expenses increased by $2,224,567 to $9,310,477 for the twelve months ended December 31, 2015 as compared to $7,085,910 for the twelve months ended December 31, 2014. This was primarily due to a $1,403,268 increase in professional fees and $606,245 increase in salaries and benefits.

Category

Twelve
Months Ended
December 31, 2015

Twelve
Months Ended
December 31, 2014

Increase / (Decrease)

Salaries, benefits, taxes and contractor payments

3,816,241

3,209,996

606,245

Professional fees

3,563,885

2,160,617

1,403,268

Rent

475,808

459,798

16,010

Business development

109,515

68,735

40,780

Travel expense

322,156

303,293

18,863

Filing fees

100,001

101,836

(1,835)

Transaction (gains) losses

(77,094)

(44,127)

(32,967)

Other expense

999,965

825,762

174,203

Total

$9,310,477

$7,085,910

$2,224,567

Salaries, benefits, taxes and contractor payments increased $606,245 primarily resulting from $332,961 from the acquisition of PayOnline in May 2015. The balance of the increase was due to increased management headcount.

Professional fees increased $1,403,268 primarily resulting from the May 2015 acquisition of PayOnline ($789,197) and increased legal and accounting fees from increased public filings in 2015 versus 2014.

Other expenses increased to $999,965 in 2015 from $825,762 in 2014. The $174,203 increase was primarily comprised of a $46,332 increase due to the acquisition of PayOnline and $507,660 due to an increase in expenses our Mobile Solutions segment, $44,553 increase in North American Transaction Solutions segment primarily due to an increase in communications and office expenses offset by a $424,342 decrease in other Corporate expenses. Other expenses that decreased in Corporate for the year ended December 31, 2015 include general office expenses and expenses related to communications.

We recorded a provision for bad debts of $649,571 for the twelve months ended December 31, 2015 as compared to a recovery of ($1,153,147) for the twelve months ended December 31, 2014. The recovery in 2014 was due to the reversal of $1.6 million loss provisions that were not required during the reorganization of the Mobile Solutions segment offset by $0.5 million of ACH rejects.

Depreciation and amortization expense consists primarily of the amortization of merchant portfolios plus depreciation expense on fixed assets, client acquisition costs, capitalized software expenses and employee non-compete agreements. Depreciation and amortization expense was $2,513,162 for the twelve months ended December 31, 2015 as compared to $2,358,136 for the twelve months ended December 31, 2014. The $155,026 increase in depreciation and amortization expense was primarily due to purchased merchant portfolios reaching full amortization during 2014 resulting in decrease in amortization offset by an increase the amortization of intangible assets acquired in the purchase of PayOnline.

Interest expense was $3,575,698 for the twelve months ended December 31, 2015 as compared to $3,705,694 for the twelve months ended December 31, 2014, representing a decrease of $129,996. The reduction is due to reduced amount of credit facility balance outstanding in 2015 versus 2014. The majority of 2015 interest was due to the amortization of the derivatives attributed to beneficial conversion features from debt and warrants.

Gains and losses on derivatives, debt extinguishment and debt restructure were as follows:

Item

2015

2014

Variance

Settlement of beneficial conversion derivative
Gain / (Loss)

($26,932,496)

$5,569,158

($32,501,654)

Debt Extinguishment / Debt Restructuring
Gain / (Loss)

27,743,980

(4,588,219)

32,332,199

Total

$811,484

$980,939

($169,455)

We reported a net gain on derivatives, debt extinguishment and debt restructure of $811,484 and $980,939 for 2015 and 2014 respectively. The gain in 2014 was $169,455 higher than the gain for 2015 as the deal terms and market conditions were different each year.

Reconciliation of Non-GAAP Financial Measures and Regulation G DisclosureTo supplement its consolidated financial statements presented in accordance with United States generally accepted accounting principles ("GAAP"), the Company provides additional measures of its operating results by disclosing its adjusted net loss. Adjusted net loss is calculated as net loss excluding non-cash share based compensation and other one-time, non-recurring items not present in this year or last year results. Net Element discloses this amount on an aggregate and per share basis. These measures meet the definition of non-GAAP financial measures. The Company believes that application of these non-GAAP financial measures is appropriate to enhance the understanding of its historical performance through use of a metric that seeks to normalize period-to-period earnings.

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the year ended December 31, 2015 and 2014 is presented in the following Non-GAAP Financial Measures Table.

GAAP

Share-based
Compensation

Derivative Activity, Debt Extinguishment
and Restructure

Adjusted Non-GAAP

Twelve Months Ended December 31, 2015

Net loss

$(13,327,926)

$4,306,304

$(811,484)

$(9,833,106)

Basic and diluted earnings per share

$(0.21)

$0.07

$(0.01)

$(0.15)

Basic and diluted shares used in computing earnings per share

63,911,199

63,911,199

Twelve Months Ended December 31, 2014

Net loss

$(10,214,766)

$4,267,334

$(980,939)

$(6,928,371)

Basic and diluted earnings per share

$(0.27)

$0.11

$(0.03)

$(0.19)

Basic and diluted shares used in computing earnings per share

37,255,052

37,255,052

Additional information regarding Net Element's results 2015 may be found in Net Element's annual report on Form 10-K, which was filed with the Security and Exchange Commission (SEC) on March 30, 2016 and may be obtained from the SEC's Internet website at http://www.sec.gov.

About Net ElementNet Element, Inc. (NASDAQ: NETE) operates a payments-as-a-service transactional and value-added services platform for small to medium enterprise ("SME") in the US and selected emerging markets. In the US it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant point-of-sale solution Aptito. Internationally, Net Element's strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions such as UAE, Kazakhstan, Kyrgyzstan and Azerbaijan where initiatives have been recently launched. Further information is available at www.netelement.com.

Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as "continue," "will," "may," "could," "should," "expect," "expected," "plans," "intend," "anticipate," "believe," "estimate," "predict," "potential," and similar expressions are intended to identify such forward-looking statements. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Net Element and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) Net Element's ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (ii) Net Element's ability to maintain existing, and secure additional, contracts with users of its payment processing services; (iii) Net Element's ability to successfully expand in existing markets and enter new markets; (iv) Net Element's ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (v) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vi) the ability to attract and retain qualified employees and key personnel; (vii) adverse effects of increased competition on Net Element's business; (viii) changes in government licensing and regulation that may adversely affect Net Element's business; (ix) the risk that changes in consumer behavior could adversely affect Net Element's business; (x) Net Element's ability to protect its intellectual property; (xi) local, industry and general business and economic conditions; (xii) adverse effects of potentially deteriorating U.S.-Russia relations, including, without limitation, over a conflict related to Ukraine, including a risk of further U.S. government sanctions or other legal restrictions on U.S. businesses doing business in Russia. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed by Net Element with the Securities and Exchange Commission. Net Element anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. Net Element assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.